Titbits: The inflation v/s Growth Debate ; The Right Policy Mix; Inflation Risks; Weak Monetary Transmission Mechanism; Effect of PRB awards on Inflation.

The Inflation v/s Growth Debate

As slipping growth accentuated recently, the Ministry of Finance (MOF) and the Bank of Mauritius (BOM) have found themselves increasingly at odds and the MOF looked to the Central Bank to reduce interest rates to provide a fillip to growth. The view that the MOF is for growth and that the Central Bank is obsessed with price stability is a simplification. Similarly, reference to policies of central banks across the planet and their “forward guidance” strategy to try to justify one’s pro-growth position is illogical and absurd

Titbits: The ESTP ; The Poverty Issue ; Cost-effective Social Transfers ? ; The Evil of Inflation and Inequality.

The Economic and Social Transformation Plan: a non-starter
(Published in MTimes and in L'express 01.09.2013)

We recently had the opportunity in the context of the seminar on the ‘Country Strategy Paper – Mauritius’, presented by the African Development Bank, to listen to the arguments of the Financial Secretary (FS) on the Economic and Social Transformation Plan (ESTP). It was in reply to the few well-chosen barbs of his earlier mentor, Mr R.Sithanen, with respect to the present state of policy paralysis, the absence of any meaningful reforms and the lack of development of opportunities for new sectors. The FS failed to convince us. After having held the country to ransom for seven years with its short-term incoherent and uncoordinated policies and undermining all attempts to set up an independent full-fledged planning unit, it is not the last-minute elbowing to pull out a summarily concocted 10-year plan -- the famous ESTP -- that will convince us that the Ministry of Finance (MOF) can carry out high level thinking, innovative policy making and planning.

Titbits : Tinkering at the edges; Fiddling with the HBS figures

Tinkering at the edges
(Published in L'Express August 2013)

As we go through another round of downward revision in our GDP growth rate, the easiest explanation for our lack of resilience is to blame the adverse conditions of the global economy -- the aftermath of the recession and the ongoing euro crisis that has affected growth across the world. The growth slowdown now deeply entrenched across most of the sectors of the Mauritian economy is merely a symptom of what ails Mauritius -- not the problem. A large part of the problem is the policy inertia on the domestic front.

PRB: Compensation for improved service delivery?

(Published in MTimes and in L'express 05 June 2013)

The Minister of Finance is saying that the Pay Research Bureau (PRB) will be costing us yearly some Rs 9000 per worker. This statement does not allow us to form an opinion as to whether the compensation of about Rs 5.6 billion rupees to the civil servants is justifiable; the PRB award is a combination of compensation for the loss of purchasing power and for the improvement in the productivity of the public sector worker .We have to examine the rewards of government workers vis- à -vis their output or their service delivery. So the discussion should not be focusing on what it costs to the economy or the taxpayer but whether the compensation to the civil servant relative to his improved productivity is excessive or not? Does he deserve it?

Titbits: A new dawn: fantasy or reality ; Ministry of Finance: A gradual demerger ; The Underground Economy; The socio-cultural rogues

  A new dawn: fantasy or reality

As we time travel to 2050 and beyond, the “big” small island unravels itself as a “model of sustainable growth that is equitably shared and with a high score in the Human Development Index. Relative poverty has disappeared. ….. The country that outshines all others on the world map stands out in term of facilities” -whether it is public transport or the Light Rail Transit , IT connectivity, trained workers and specialists or innovation and research . It also has a vibrant cultural and night life in world class cities that exhibit its wealth of diversity, its soulful art and trendy architecture, high urban living, choicest gastronomic offers and varied landscapes. ( “Born in 2013” in L’Express 50 ans avec le Pays- 27 April 2013”). Everyone can have his own views about the future. The future belongs to those who believe in the beauty of their dreams. You need to have the courage and conviction to walk the talk, regardless of the obstacles that will lay strewn in your path.

Titbits: A road map for the financial sector; As Growth putters !!! ; All authority and no responsibility;Teaching Entrepreneurship.

 

A road map for the financial sector

We have been overwhelmed recently by a volley of bold claims that Mauritius is establishing itself as a regional financial centre-a gateway to the emerging world or that is perfectly positioned between Africa and Asia to become a financial hub which can be counted on in the Indian Ocean region. Are we providing the financial sector the means to play this role ? A road map for the sector is long over due; we have been waiting for a reengineering and modernization of the sector since 2006 with aim of transforming it into a financial services sector that is characterized by speed and continuous innovation; a sector characterized by its increasing ability to leverage capital markets, specialized skills and technology to innovate and create new products, processes and services; these are the prerequisite to being a sustainable premier financial centre that has both width as well as depth.

Financial Regulation and Crime

Published in Le Mauricien, 11 April 2013

Following the blowup of a financial scam and the crackdown on unlicensed investment activities by the regulatory authorities concerned, namely the Bank of Mauritius and the Financial Services Commission, an interesting exchange of crossfire has taken place in the media, involving the ministry of finance, and the current and former BOM Governors.   The present BOM Governor was quick to direct his diagnosis towards legal and regulatory gaps, especially between the BOM and the FSC. The Ministry of Finance, for its part, felt it was premature to pin the blame on legal shortcomings, while the rumblings from Government appeared instead to reflect dissatisfaction with the FSC's role, rather than the BOM. A former BOM Governor authoritatively supported the notion of regulatory gaps, while another shot it down to pieces without any equivocation.